Thoughts about saving for retirement

By Stew

retirement fishing

I am really discouraged about my retirement savings.

I understand the importance of saving for retirement, but debt reduction is our number one priority right now.

My job has a great 5% matching program, but we are still almost living month to month and cannot seem to squeeze out the extra money necessary to enter this program.

I am 35 years old – not too late to start saving, but every day I am losing money.

I do not have any hope of ever seeing a social security check. The program is already bankrupt . . . I hate watching my social security payroll deduction and the employer half poured down the drain every month. Sigh.

At this point, my main support in retirement will probably come from my children . . . maybe we should have a few more.

Retirement is more or less a western phenomenon and there are certainly people in the United States who never retire. Health permitting, I could work for as long as I live. It is not a terrible thought, I like my job, but if my health does not allow it, we could be in trouble.

The chances of getting a major inheritance from someone in our family are remote. My wife and I basically come from the same background – parents who were frugal, worked hard, but mostly worked for low salaries in non-profit, ministry-type professions. I don’t think either of our respective parents will leave us much of an estate. Our grandparents might have some money saved, but by the time it gets distributed to all of the grandchildren, there will not be much left. We are in no way upset by this, it is just a fact.

I had the capability to have saved $500 to $1,000 per year, every year during college and afterward until I was married at 27. I wish someone had pulled me aside and showed me how to open some kind of retirement account back then. Even if I had quit contributing when we were married or when our kids were born, we would still have a nice amount saved up.

We are doing our best, but right now there just is not any money available for retirement savings. Ultimately, we will have to trust that God will meet our needs when the time comes. I know that He will. It just might not be a nice retirement home in Del Boca Vista.

This world is not my home I’m just passing through

my treasures are laid up somewhere beyond the blue

the angels beckon me from Heaven’s open door

and I can’t feel at home in this world anymore

They’re all expecting me and that’s one thing I know

my savior pardoned me and now I onward go

I know He’ll take me through though I am weak and poor

and I can’t feel at home in this world anymore

Just up in Glory Land we’ll live eternally

the Saints on every hand are shouting victory

their song of sweetest praise drifts back from Heaven’s shore

and I can’t feel at home in this world anymore

O Lord you know I have no friend like you

if Heaven’s not my home then Lord what will I do?

the angels beckon me from Heaven’s open door

and I can’t feel at home in this world anymore

I know that heaven is my real home and I am confident in that fact, but if you have the opportunity and ability to save for retirement -do it! (because I might need to call you for a loan) :)

– Article by Stew

Photo by zoetnet

15 Responses (including trackbacks) to “Thoughts about saving for retirement”

  1. Mneiae Says:

    Don’t be so down about the Social Security thing. You will have Social Security when you retire! The system isn’t perfect and you may not be drawing as much, in the living costs respect, as the people who draw Social Security now.

    As for retirement, it’s not a Western phenomenon. What is Western is the set age at which you retire. In other cultures, you work until you’re infirm and then your children take care of you. That could mean that after your stroke at 50, your kids provide for you. It could also mean that you work until you’re 75 because you are still fully capable of working full time. The American system only allows a few years of variance, while the actual difference of what should be your retirement age may be much more.

  2. Mike Says:

    I’m sure they will maintain Social Security. If they don’t, they will have much bigger problem to solve!

    As for retirement, try saving $25 per month with an automatic withdrawal in a balance mutual fund. It will hurt the first few months and then, you won’t even notice the transaction in your bank account.

    While $25 per month is not much to build a retirement fund, it will slowly create the habit… and force you to cut on coffee or going out for lunch!

  3. Courtney Says:

    Your outlook on social security is ridiculous. The program is not “already bankrupt.” It’s still currently taking in more money than it’s paying out, and is projected to do so for another 2-9 years, depending on whose calculations you use. Then the social security trust fund IOUs will be called in to make up the deficit until 2040-2050, again depending on whose calculations you’re using. By that point they’ll still be taking in enough payroll taxes to pay an estimated 50-70% of current benefits. And this is all assuming that nothing is done to fix the program.

    They tell younger people not to use social security in their financial planning calculations, because we have no way of knowing HOW MUCH benefit we’ll be getting. But short of total anarchy (in which case we’ll have a lot bigger problems on our hands), social security will still be paying out something. Given that you’re 7 years older than me you’ll probably get more promised benefits than I will.

    And relying on your children for your retirement is a great way to cripple their own futures.

  4. Laura in Atlanta Says:

    I think what is important to keep in mind also is what KIND of retirement you want? I think the Western idea of reitiring to the beach and traveling the world in retirement is unrealistic nowadays for most people. But honestly, if you are happy to live simply, maybe take one trip a year, keep busy by volunteering and keeping a part time job . . . then yes, a retirement is easier to attain. I honestly think I would be bored out of my mind if I took a FULL retirement at 62, or 65, or 67 . . . I plan to work part time someplace.

    My financial guy swears up and down that Social Security will not be completely gone by time I retire, he does say however, that we will probably only recieve about 75% of what is currently projected. So, it’s something at least. That, plus a small pension from my current job, plus part time work should do (fingersc rossed) fine for me. The emphasis NOW is to invest in my health, so that i dont have problems later on. I have pretty much switched back to being a vegetarian, and am focusing more on daily exercise of some sort. Taking care of yourself now, so that you dont have massive health problems later on seems to be one of the most proactive things you can do.

  5. Kenny Says:

    We live in a great country and there is a LOT of opportunity. I know of many immigrants who come here and live under the means for the first few months, but then they bounce out of it. WHY? HOW?

    The BEST is to have each person in this situation start putting in more hours during the day/night to what the mind/body/soul will allow, and get the 2nd paycheck. If this means that you have to work a 2nd job where they allow 85% of the paycheck to get to a 2nd 401(k) account, then so be it. I know someone who does this and now has $500K in the 401(k) account, puts in 40+32 hours per week (7 days) and saves a lot.

    What happens when you work two jobs is that you do NOT have time to spend. Give up your life for 10 years, and you will be writing an article in 10 years saying that I am not worried if SS will be around or not.

    Also, what will happen is that you will be teaching your kids that ‘working hard’ is part of life, to meet/match goals.

    What the 2nd job will also do, is for your family to go out on bigger vacations (which might not be possible).

    Frugal living has a lot of PROS and few CONS in my opinion. I am teaching my kids by not buying a replacement product, but repairing what we have, or living with ‘prepaid cell phones’ when everyone around us have ‘unlimited calling plans’.

    Our retirement is not taking care of either, but we have significant savings that will carry us well into 80’s from our 401(k) and IRA account perspective. It was not easy to get here, but we got here by sacrificing cokes at every meals, not buying coffee at Starbucks, and not giving ourselves/kids an on-ship credit-account to buy drinks (instead drinking juice and iced-tea)…..I’m off the main topic, but savings comes from spending less, which leaves money for retirement!!!!!

    Good luck.


  6. Dramon Says:

    Because 401k $ are pre tax, you might be surprised at how little it really impacts your take home pay. I would recommend that you start small and see how little it is. Then if you are fortunate enough to get a raise, put 1/4 of the raise into your 401k. You lived without the raise before.

    Leaving a 5% match go is giving a 5% raise away ( although I agree you get a lot more than 5% on paying down your debt).

    On the whole social security discussion. People were never meant to retire JUST on social security. It is supposed to be a part of your retirement, not the whole thing. As everyone points out, there will probably be some social security. I am older and I still anticipate benefits being reduce or the years to retire being stretched.

  7. Gina Says:

    Stew, Mike has your solution …

    “As for retirement, try saving $25 per month with an automatic withdrawal in a balance mutual fund. It will hurt the first few months and then, you won’t even notice the transaction in your bank account.”

    This is a win-win in 2 ways: 1) you will not worry as much about not contributing to your retirement, and 2) you will have more motivation to keep from eating out lunch while at work {an issue you mentioned in a prev post}. Then when you are out of debt in a few years you can play ‘catch up’ by sending what you were paying on your debt to a retirement account.

  8. Frank Says:

    Why not put in 5%, get the 5% match (10% total pre-tax), and then withdraw it all, every month, ASAP. Depending on your tax rate you’re likely still coming out ahead (you’ll pay taxes AND a 10% penalty each withdrawal). Once your debt is paid off and the emergency fund is built up, just stop taking the money out of the 401K. :)


  9. Courtney Says:

    Frank – interesting, if unconventional solution. Many workplaces vest their matching contributions over time though, to prevent people from doing exactly this.

  10. Frank Says:

    Courtney – you’re right – he didn’t say if it’s immediately 100% vested or not. Even if it didn’t vest right away he could withdraw his 5% contribution (paying taxes and the 10%), and while he’d have a *little* less take-home income, he’d still have his employer’s match in there waiting to vest.

    I’ve been lucky that my last two employers have had decent matches (3% and 4%) and both vest immediately 100%.

  11. ABCs of Investing Says:

    Stew – you are only 35 – you have lots of time.

    The important thing is to improve your overall finances, whether by increased savings, lowering debt or selling extra houses. Given your situation I’m surprised you have any retirement savings at all. Selling the old house was a great step and while you might not make a lot progress over the next couple of years, as long as you can keep the ship afloat then things will be fine when your wife goes back to work.

  12. Gina Says:

    Frank, you cannot just take money out of your 401k. It is not a regular savings account. It has to be a medical emerg or someother hardship to withdraw money prior to leaving the job. The only time you can “cash in” your 401k is when you leave the job. And when you “cash it in”, you pay the 10% penalty PLUS the 32-38% (tax bracket) on the distribution as income. Are you suggesting that he withdraw $$$ at a 42-48% penalty?

  13. Becky@FamilyandFinances Says:

    I think you should start with a 1% contribution. If you *really* can’t do it now, then do it at your next raise – no matter what!!! Then, at the following raise, increase your contribution to 2%. Rinse and repeat until you’re at 5%!

  14. Scott Lovingood Says:

    I think you will be surprised by how much being debt free will impact your retirement.

    I would say that starting with a 1% contribution may not be as much as you think but will add up over time. Start a side business, work a few hours part time at another job. Do freelance work if you have the skills. Develop the skills if you don’t ;)

    Start a family business so you can spend time with each other while you work on building your wealth.

    Don’t get discouraged. Don’t worry about SS. It may exist it may not. I have no idea but I sure won’t depend on it. My parents are debt free and basically live off their SS checks. They don’t live lavishly but they enjoy life.

    As long as you have your priorities straight, the rest will take care of itself.

    Come read my post on What is wealth

    I think you will like it.